Tax Tips For Couples Filing Taxes TogetherBrian Jang ON January 23, 2017
Marriage comes with tons of great benefits, including some nifty tax breaks. And while a romantic getaway for two sounds far more appealing than a visit to your accountant, the latter could save the both of you some serious cash down the road. So, if you are married or common law partners, here are some tax tips to help make the most of your returns—and your financial future together.
Save Time and Money
Let’s be honest. No one really enjoys tax time. Working together as a couple, however, you can make the process move along much more smoothly and quickly. Doing your taxes as a pair will not only streamline your tax tasks, but also cost you less to have them prepared.
Take Advantage of the Home Buyers’ Plan (HBP)
Like many couples, you’re probably bouncing around the idea of purchasing a home. If you are, the Home Buyers’ Plan is a great marriage tax benefit that can help make owning some property a little more affordable. The HBP allows you to take out up to $25,000, tax-free from your RRSP to put toward your new purchase. Plus, you’ll receive a tax credit when you buy your first home.
Help Pay for Education
The Lifelong Learning Plan (LLP) is another great spousal tax credit couples can benefit from. With it, you will be able to withdraw up to $20,000 from your RRSP to pay for education or training for yourself or your partner. With this, you won’t have to take out a loan which will cost you a ton through high interest rates.
Looking to get a bigger bang for your buck? As a couple, you can pool some of your credits together and claim it on a single tax return (usually the person with the lower taxable income). Some of the credits you and your spouse can combine include medical expenses, public transit passes, and charitable donations.
Filing taxes as a married couple means you can also benefit from spousal credit transfers. If your partner doesn’t use all their non-refundable credits, they can pass them over to you to help lower your tax burden.
Frequently Ask Questions about Filing Taxes Together
Here are some answers to some frequently asked questions about filing taxes as a married couple.
Can married couples file taxes separately?
Unlike the United States, where couples can file joint income tax returns, spouses in Canada must file separate tax returns.
What are the advantages of filing taxes separately?
One of the biggest advantages of filing separately is that you and your partner are only responsible for your own individual tax liability.
How does marriage affect taxes?
When you are married or common law partners, your taxable income and tax rate may increase or decrease depending on the amount of your combined income and expenses.
- Registering for the GST Retroactively
- Which Canadian Business Structure is Right for You?
- The Gig Economy in 2020: Tips for Saving Taxes
- How the Government is Helping Seniors During the COVID-19 Pandemic
- The True Costs of Everyday Expenses